Saturday, October 6, 2007

MAS issues revised property fund guidelines

MAS issues revised property fund guidelines

The Monetary Authority of Singapore (MAS) has issued revised Property Fund Guidelines (REIT Guidelines). The revised Guidelines are intended to improve safeguards for investors and to provide greater clarity and flexibility for commercial transactions. The Guidelines have also been rationalised to reduce compliance costs in a number of areas. The changes include:

Enhancing the disclosure requirements on the use of short-term yield-enhancing arrangements; Providing guidance on permissible fixed-term management contracts; Disallowing discounts to institutional investors for subscriptions made at the time of listing of a REIT; Specifying safeguards for REITs that intend to pay dividends in excess of current income; Requiring a REIT to invest at least 75% of its assets in income-producing real estate; and Removing the 5% single party limit for investments in real-estate related securities.

MAS will amend the Securities and Futures Act (SFA) to include REIT management as a regulated activity. The Securities and Futures (Licensing and Conduct of Business) Regulations and Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations will also be amended to set out the capital requirements and licence fees for REIT managers, as well as provide for a transitional period for existing industry participants.

In revising the REIT Guidelines, MAS considered feedback from its public consultation in March this year and held discussions with REIT players. Our responses to the comments received from the public consultation are published on the MAS website. MAS will continue to engage industry players and ensure that our regulatory regime remains progressive and keeps pace with the market’s development and growth.